What impact will the generational wealth transfer have on the giving and receiving generations - and on financial institutions? This is an important consideration for all parties involved – both individuals who stand to become beneficiaries and financial institutions that anticipate retaining these deposits within their organization. As the financial services industry prepares for one of the largest wealth transfers in history, the conversation around generational wealth is evolving from long-term inheritance planning to real-time financial enablement. 

Figure 1: Deposits and investments

Generational wealth transfers will be significant

Source: Federal Reserve, 2024

According to Raddon research (Figure 1), an estimated tens of trillions of dollars are expected to shift from Traditionalists to Baby Boomers to Gen X and Millennials in the coming years, creating an opportunity for families and financial institutions alike, but the wealth shift can also create risk for financial institutions. One of the most significant applications of generational wealth transfer that can happen today is in the housing market: older generations directly supporting younger family members in purchasing homes through financial gifting.

With affordability challenges rising and younger consumers feeling financially constrained, this shift represents both a critical need and a strategic opportunity for financial institutions.

The Current Reality: A Growing Affordability Gap

Today’s younger generations face a difficult financial landscape. A significant proportion of Millennials and Gen Z indicate that they perceive themselves as financially disadvantaged relative to previous generations. Today, many households do not possess sufficient liquidity to withstand even minor financial disruptions. Some additional factors delaying home purchases include the following:

• Home prices have increased at a faster pace than income
• Rents have increased over the past years, which accounts for the lack of savings to purchase a home

The Federal Reserve’s Economic Well-Being of U.S. Households in 2024 reports that renters most often say they rent due to financial constraints, and it also notes that price increases outpacing income make it harder for younger adults to buy. The National Association of Realtors reports that the first-time buyer share fell to a record low of 21%, based on transactions July 2024–June 2025, and the median age of a first-time home buyer hit 40 (all-time high) compared with the “late 20s” in the 1980s.

Homeownership – historically, a primary driver of wealth creation – has become increasingly difficult to attain. But with the older generation helping the younger generation, generational wealth is no longer just transferred later in life – it can be deployed earlier to solve immediate financial barriers.

The Shift: From Inheritance to Early Wealth Transfer

Traditionally, wealth transfer occurred post-retirement or upon estate settlement. Today, however, families are increasingly using strategic gifting to help younger generations reach key financial milestones – especially homeownership. Gifting funds for down payments, closing costs, or debt reduction is becoming a practical and powerful mechanism to accelerate financial progress.

5 Strategic Benefits of Gifting for Homeownership:

1. Accelerating Entry into Wealth-Building Assets

Homeownership remains one of the most effective pathways to long-term wealth accumulation. By helping younger family members overcome the initial barrier to entry, older generations enable earlier participation in asset appreciation and equity building.

2. Reducing Financial Strain and Risk Exposure

Without support, many prospective buyers face trade-offs such as:

• Delayed homeownership
• Increased reliance on debt
• Limited savings post-purchase

Gifting can reduce these pressures, allowing for more stable financial positioning from the outset.

3. Aligning Wealth Transfer with Purpose

Rather than transferring wealth passively in the future, gifting allows families to see the immediate impact of their financial support – turning long-term intent into tangible outcomes. This strengthens both financial outcomes and family engagement around shared goals.

4. Enhancing Multigenerational Financial Relationships

For financial institutions, gifting scenarios present a unique opportunity to:

• Engage both the asset holder (older generation) and the beneficiary (younger generation)
• Establish early relationships with future primary account holders
• Retain assets across generational transitions

This is particularly important given the risk of relationship attrition during traditional wealth transfers.

5. Supporting Broader Economic and Community Growth

Homeownership has ripple effects – driving local economic activity, community stability, and long-term financial health. Generational gifting, in this context, becomes not just a family strategy but a broader economic enabler.

To effectively support generational wealth planning, financial institutions should consider a strategic approach that includes:

• Internal discussions across legal, compliance, mortgage, financial advisory teams, operations, and marketing
• Early engagement models targeting Gen X, Millennials and Gen Z
• Integrated financial planning services that extend beyond transactional banking
• Digital-first experiences aligned with evolving expectations of Millennials and Gen Z (full-cycle, including transferring of funds between generations, mortgage application, processing, and funding/servicing)
• Education-driven strategies to build financial literacy and trust

Generational wealth planning is undergoing a fundamental shift. It is no longer solely about what is passed down – it is about when and how it is deployed to create the greatest impact.

Helping a child or grandchild purchase a home is:

• A catalyst for long-term wealth creation
• A reinforcement of family values
• A strategic opportunity for financial institutions to build lasting relationships

Institutions that proactively evolve their approach will be better positioned to capture and retain assets during this historic transition in approaches. As wealth continues to move across generations, those who focus on enabling outcomes – not just managing assets – will define the next era of financial services.

****Consult with a qualified, licensed tax advisor for expert advice on wealth transfer and tax matters****